CA Final Corporate Law Appointment and Qualifications of Directors Short Notes

At the Final level, the Company Law portion of the subject “Corporate and Economic Laws” involves conceptual understanding, analysis and application of provisions of the Companies Act, 2013 to solve application-oriented issues. This subject is very dynamic on account of the amendments on a regular basis.

Director, who is a person of integrity and possesses relevant expertise and experience. The Director is not a Promoter of the company or its holding, subsidiary or associate company.

  • An independent director shall hold office for a term of up to 5 consecutive years on the Board of a company, but shall be legible for reappointment on the passing of a special resolution by the company, and
  • Disclosure of such appointment in the Board's report.
  • No independent director shall hold office form or than two consecutive terms, but such independent director shall
  • Bee legible for appointment after the expiration of three years of ceasing to become an independent director
  • Provided that an independent director shall not, during the said period of three years, be appointed nor be associated with the company in any other capacity, either directly or indirectly.

Provisions related to Small Shareholder Director (SSD) [Section151] read with Rule 7 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

  • SSD shall not be liable to retire by rotation
  • SSD’s tenure shall not exceed a period of 3 consecutive years and on expiry of the tenure, he shall not be legible for re-appointment.
  • A person shall not be appointed as SSD if the person is not eligible for appointment interns of section 164.
  • SSD shall vacate the office if (i) the SSD incurs any of the disqualifications specified in section 164; (ii) the office of the SSD becomes vacant in pursuance of section 167;
  • (iii) The SSD ceases to meet the criteria of independence as provided in section 149 (6).
  • SSD shall not hold the position of SSD in more than two companies at the same time. Moreover, the second company In which he is appointed as SSD shall not be in the competing business with that of the first company.
  • An SSD shall not, for a period of three years from the date on which he ceases to hold of face an SSD in a company, be appointed in or be associated with such company in any other capacity, either directly or indirectly.

Appointment through single resolution

  • Each director shall be appointed by a separate resolution
  • Unless them eating first agreed that the appointment shall be made by
  • A single resolution and Nov oath as been cast against the such agreement.
  • Contravention of the above shall be void.
  • A motion for approving a person or for nominating a person, for appointment as a director, shall be treated as a motion for his appointment.

Disqualifications for appointment of director [Section164 (1)]

  1. Of unsound mind and so declared by a competent court;
  2. A discharge in a solvent;     
  3. Applied to be adjudicated insolvent and his application is pending
  4. Convicted by a court of any offence, and sentenced in respect thereof to imprisonment for a minimum of 6 months and a period of 5 years has not lapsed from the date of expiry of the sentence. However, if a person has been convicted of any offence and sentenced diner spect thereof to imprisonment for a period of 7 years / more, he shall not be eligible to be appointed as a director in any company.  
  5. An order disqualifying him for appointment as a director has been passed by a court or tribunal and the order is in force;      
  6. Not paid any calls in respect of any shares of the company held by him, and 6 months have elapsed from the last day fixed for the payment of the call;
  7. He has been convicted of the offence of dealing with related party transactions under section 188 at any time during the last preceding 5 years; or
  8. He has not complied with section 152 (3) which requires a director to have a din under section 154.

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